Coming To a Field Near You: Nitrogen Reduction Credits

You can soon earn credits for reduced fertilizer application if you prove it reduces nitrous oxide (N2O) emissions, which are a potent greenhouse gas. That could be a big "if."

N2O is 310 times more potent in trapping atmospheric heat than carbon dioxide, according to the California nonprofit group Climate Action Reserve (CAR), which released an N-management protocol June 28. “The ultimate goal is to reduce greenhouse gas (GHG) emissions from farm-applied nitrogen fertilizers by awarding verifiable credits that can be traded on related exchanges,” CAR said. The concept is similar to cap and trade carbon-trading mechanisms.

“More than two-thirds of all U.S. N2O emissions come from management of agricultural land,” CAR says, citing EPA statistics, “or 3.1% of total U.S. emissions.

“Through more efficient application of N fertilizer under this protocol, farmers can achieve reductions in GHG emissions, generate carbon offsets, earn revenues from the carbon market and provide an important commodity to a growing world population,” CAR says.

Iowa State University Agronomist Michael Castellano adds, “The ag sector accounts for less than 10% of total U.S. GHG emissions. Of the 6.3% of U.S. GHG emissions coming from agriculture, about half are from N2O. U.S. farmers are the most efficient in the world, and that is evidenced by a low contribution towards total U.S. GHG emissions.” His research specializes in N-related sustainability issues.

Since CAR’s new protocol specifically targets the Corn Belt, farmers may find themselves involved in the issue. “For far too long, the role of agriculture in climate change mitigation has been ignored, but appropriate attention to agricultural offsets is building a full head of steam,” says Debbie Reed, president of DRD Associates and executive director at Coalition on Agricultural Greenhouse Gases.

An exchange for trading these N2O credits does not yet exist, but is expected to materialize, he says. The value of the credits will be determined in the marketplace, and proceeds likely shared with aggregators who help farmers with technical support, he says.

Another thing that doesn’t exist yet is scientific certainty about ways to reduce N2O emissions from N fertilizer, say Castellano and University of Illinois Crop Sciences Professor Emerson Nafziger. “We typically lose 1-3% of the N fertilizer to N2O gas emissions during the growing season. There is no sure way to reduce that, at least not down toward zero,” Nafziger says.

“Measuring N2O has become a common research activity because it’s such a potent greenhouse gas. Some N2O is produced during denitrification, which is common in wet soils. So N2O emissions depend partly on the weather. That makes it difficult to say with certainty that one application method or N form is more effective than another at reducing N2O,” Nafziger says. “Applying ammonium (NH4) and slowing its conversion to NO3 can reduce dentrification, so that might be at least a start. Improving drainage can help (to reduce losses from denitrification in wet soils) as well.”

John Sawyer, Iowa State University agronomy professor, agrees with Nafziger and Castellano. "We have much to learn about the issue. Nitrous oxide from crop production is highly spatially and temporally variable, and practice effect is still quite uncertain. We don’t want to implement practices that do not have expected results, and with potential large costs. Also, many look to agriculture for solutions to air quality issues (like carbon and nitrous oxide), but in reality, agriculture often cannot provide an easy or straightforward solution. An example is carbon trading/sequestration/credits – and documenting is difficult. And agriculture may not even have the potential for substantial change in regard to nitrous oxide (overall effect, not just within agriculture)."

Castellano, who studies the intricacies of nitrogen dynamics and potential emissions, confirms that the science of controlling N20 emissions form agricultural fields is a work in progress: "There is little to no scientific evidence for tile drainage effects on N2O. And here is how complicated it gets: While improved drainage is likely to reduce denitrification N2O losses from the surface soil, it could possibly increase nitrate leaching. Assuming a portion of that leached nitrate is eventually transformed to N2O, it may be difficult to measure the net effect on N2O emissions.

"We see similar complexity with our cover crop work in Ames: In some years, cover crops increase N2O emissions from the soil surface in a corn-bean rotation. However, assuming cover crops reduce nitrate leaching and thus the amount of N2O that is produced from that leached nitrate downstream, cover crops could very well reduce total N2O losses from the ‘system’. Just because we see increased N2O emissions from the soil surface, I would not say that cover crops increase N2O loss from the system.

"Tillage is another example. Evidence suggests no-till increases N2O emissions in the short term, but reduces N2O emissions in the long term. This effect is further modulated by climate and soil properties such as texture."

The CAR N-management protocol calls for reducing N application rates on corn fields without reducing crop yields, by improving the efficiency with which N is applied so that crop yields are not affected, CAR’s Broekhoff says.

The newly announced CAR N-management protocol is technical enough to likely require help from an aggregator to interpret and implement on the farm, CAR’s Broekhoff says. N2O aggregators are yet to form, but they would conceptually resemble earlier carbon-credit aggregators, which included several farm organizations and commodity groups.

N2O-reduction credits would need to be independently verified before credit is granted for reducing qualifying N fertilizer applications, which in turn could earn N2O-reduction credits.

The first version of CAR's N-management protocol applies to corn crops in 12 Midwestern states: Illinois, Indiana, Iowa, Kansas, Michigan, Minnesota, Missouri, Nebraska, North Dakota, Ohio, South Dakota and Wisconsin. “However, the N-management protocol is designed to accommodate additional crop systems, geographic regions, and agricultural management practices as data and analysis warrant their inclusion,” Broekhoff says.

“There is a market for these credits: emitters looking to voluntarily reduce their emissions by purchasing to meet their own voluntary climate change mitigation goals. There is also the prospect that these credits could be sold into next year’s California cap and trade market.”

Regulated companies in California, like power plants and factories, may be required to reduce their emissions, and “they could meet their obligations by counting these farm-generated credits against their emissions,” Broekhoff says.

The California Air Resources Board has adopted CAR’s air resources standards for its compliance program and has expressed interest in the N-reduction protocol, he adds.

Since California is often a trendsetter, what other cap and trade mechanisms might develop in the future in agriculture?

Reducing methane emissions of California rice producers was the focus of a CAR protocol adopted last December, Broekhoff says. “Farmers here are waiting to see whether the California Air Resources Board adopts that standard before going to the trouble of registering for those credits.

“CAR is also looking to develop a soil-carbon sequestration credit for preserving carbon in soils and grasslands, avoiding the conversion of grasslands to cropland so as to enhance soil-carbon sequestration,” he adds.

“Carbon offsets are the 21st Century crop for the agricultural sector,” says Reed. “Protocols such as this are absolutely necessary to allow farmers to harvest carbon in order to achieve a successful yield of reductions in greenhouse gas emissions and increases revenue streams. Market incentives can reward farmers for stewardship activities, and done correctly, will ensure that the agriculture sector will play a serious and needed role in climate stabilization.”